Air Arabia Slumps Most Since 2013 on Loss, Cut in Dividendby and
Sharjah-based airline posts first quarterly loss on record
Carrier expects market conditions to remain ‘challenging’
Air Arabia PJSC shares tumbled the most since 2013 after the Middle East’s biggest budget carrier posted its first quarterly loss on record and reduced its dividend.
The airline, which said a capacity glut and slowing economic growth hit fares, expects market conditions to remain “challenging,” according to a statement from the Sharjah, United Arab Emirates-based carrier.
“The fourth-quarter of 2016 was impacted by deteriorating yield margins that the industry in general and the Middle East region in particular is witnessing,” Chairman Sheikh Abdullah Bin Mohammad Al Thani said. The airline reported a loss of 33 million dirhams ($9 million) as revenue dropped 15 percent.
The shares lost 8.6 percent, the most since March 2013, to 1.27 dirhams on Thursday in Dubai, making it the biggest decliner on the benchmark index. Air Arabia’s trading volume surged to about 17 times its three-month daily average.
Air Arabia joins FlyDubai in forecasting a difficult year ahead as overcapacity and lower yields hurt airlines in the Middle East.
Full-year profit declined 4.1 percent to 490 million dirhams as seat-load factor was 79 percent. Air Arabia reduced its dividend for the year to 7 fils from 9 fils.